Contribution to the economic growth of foreign investment in construction sector: The case of Turkey

By the globalization of the economic activities, the capital movements have increased worldwide. The share that developing countries get from foreign capital flows has been gradually increasing. Now that foreign direct investments (FDI) have a positive effect especially on development, developing countries are in great competition to attract FDI. Foreign direct investments which composing important part of transnational investments has reached to peak of the history. Turkey is getting a vital proportion from world foreign direct investment pastry and also foreign direct investment which comes to Turkey, is essential to finance current deficit and contribute to investment for promoting economic growth. Relationship between economic growth and foreign direct investments has been analyzed according to host country and also foreign capital provide investments which promote economic growth and economic development through raising savings and investments for these countries. Furthermore, foreign direct investments provide technological transfers and accelerate human capital accumulation. The main purpose of this study is to analyze the effect of FDI in construction sector on economic growth of Turkish economy. It was observed that GNP increases, inflation fell and employment increased during the years when the construction sector gained speed in Turkey. Generally, the Turkish construction sector and FDI were reviewed in this thesis, effects of FDI in the construction sector to Turkey's economy is indicated by the statistical analysis. Key words: Foreign direct investment, economic growth, construction sector, Turkish Economy